China Recommences Discussion of Structural Reform Program

Bisnis.com, BEIJING - The internal government of China is beginning to show concern about how the country’s agenda to prepare a stimulus package in order to pursue growth targets actually obscures its main goals, such as economic reform.

In November 2013, the government issued an urgent agenda of structural reform for implementation. The government’s focus switched to the stimulus after the reports from the first quarter of this year confirmed a third consecutive quarter of declining growth for the country of the panda.

On Reuters, a member of the government council conveyed the conclusions of an internal think-tank, stating that all efforts to boost growth have already been carried out, and that the time has now come for China’s management to return to economic reform.

Tremendous efforts to jump-start the economy are no longer required. We must now focus on reforms, said Xu Hongcai, senior economist at the China Center for International Economic Exchange, in Beijing on Tuesday (7/22).

One of the next steps that must be taken by the government is to reform its fiscal system, which is tailored to the size of the local government debt.

The economists who participated in the government think-tank issued reforms expected to eventually accelerate growth over the second half of this year. President of China Xi Jinping, according to the government council, also supervised the preparation of the reform plan by various Chinese government agencies.

Last week, the Chinese government published data of 7.5% growth in the country for the second quarter of the year, which constitutes the first expansion after experiencing three quarters of contraction. This increase is considered to be a direct result from the government’s mini-stimulus disbursement.

It appears that GDP growth will continue into the second half of this year. Of particular concern is the government’s move to let the market determine the price while productivity is still weak, said Rob Subbraman, Nomura economist.

As for the stimulus measures that have been carried out by the government, these include reducing bank reserve requirements, accelerating national and local government spending, and expediting railroad and housing construction.

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